Transurban Group (TCL)

Bank of America Merrill Lynch maintains a “buy" recommendation for
Transurban Group
, saying the company has more projects in pipeline than the market appreciates.

Despite being in a mature phase, BAML says, Transurban would be a “hungry beast" over the next few years. The Cross City Tunnel (CCT) and the M1-M2 could be debt-funded and still maintain a dividend growth rate of 9 per cent to 10 per cent a year.

“But there are other growth options, namely the M5 East duplication and the potential selldown of Queensland Motorways (QML). The M5 East may require around $850 million from TCL, and QML may need $1.2-$1.5 billion if TCL can get a majority stake."

Earnings per share were 4.1¢ in 2012 and 12.1¢ in 2013, and are forecast by BAML fo be 14.9¢ in 2014, 18.7¢ in 2015 and 22.5¢ in 2016.